2016 FLSA Changes TOOLKIT FOR EMPLOYEES UNIVERSITY OF LOUISVILLE HUMAN RESOURCES. *Document is subject to change Updated

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1 2016 FLSA Changes TOOLKIT FOR EMPLOYEES UNIVERSITY OF LOUISVILLE HUMAN RESOURCES *Document is subject to change Updated

2 The Fair Labor Standards Act (FLSA) and Upcoming Changes in 2016 On May 18th, 2016 the U.S. Department of Labor (DOL) released an update to the Fair Labor Standards Act (FLSA) that has raised the exempt status salary threshold from $23,660 to $47,476, effective December 1, These changes increase the number of employees eligible for overtime pay at the university and across the country. To ensure compliance with this federal mandate, it was determined that some positions at the university would transition from exempt to non- exempt. This guide is to help those employees through this transition process. What s Inside? FLSA General Overview...2 What is FLSA?... 2 Higher Education Exception... 2 Exempt and Non- Exempt Status at University of Louisville... 2 Exempt and Non- Exempt Comparison Overview FLSA Update: What is changing?...3 Fair Labor Standards Act (FLSA) New Overtime Rule... 3 Changing from Exempt to Non- Exempt... 3 Becoming Eligible for Overtime... 3 What You Can Expect...3 Dates of Importance... 4 Things to Consider... 4 Timesheet Training... 5 Mobile Device and Computer Usage After Working Hours... 5 Frequently Asked Questions...6 Additional Information FLSA Changes Toolkit for Employees 1

3 FLSA General Overview What is FLSA? The Fair Labor Standards Act (FLSA) determines whether non- exempt. position is eligible for overtime pay. Positions are either exempt or EXEMPT NON- EXEMPT Not eligible for overtime pay Must receive overtime pay at time- and- a- half for hours worked over 40 per workweek To determine if an employee is in an exempt status position, they must pass all three tests: 1) Be paid on a fixed salary basis, not hourly; 2) Duties must pass tests under executive, administrative or professional requirements; and 3) Salary must be above the minimum threshold of $47,476 (effective December 1, 2016) If any of these tests are not met, the employee shall be considered non- exempt, and eligible for overtime. Non- exempt employees must be paid for all time worked. Higher Education Exception With the new regulations there is a special carve out for higher education exceptions for jobs such as academic counselors. The University of Louisville minimum salary threshold for this exception is $30,000. Visit the HR FLSA website for more information and a complete list of jobs that fall under this exception. Exempt and Non- Exempt Status at University of Louisville FLSA status of staff positions at the University of Louisville affects overtime pay, time reporting, leave accrual rates and the pay frequency. Exempt and Non- Exempt Comparison Overview NON - EXEMPT EXEMPT TIME REPORTING Report all hours worked on timesheet. Do not report hours worked. ANNUAL LEAVE 10 annual leave days at time of hire, to maximum of 22 days. 15 annual leave days at time of hire, to maximum of 22 days. SICK LEAVE 12 sick days per year. 12 sick days per year. PERSONAL LEAVE personal days per calendar year. Not eligible for personal days. OVERTIME PAY Overtime Straight Pay: For employees that work 37.5 hour workweeks 1 any hours worked between 37.5 and 40 hours must be compensated at the regular rate of pay. 2 Overtime Time- and- a- Half Pay: Any hours worked beyond 40 hours in a workweek must be paid time- and- a- half of the regular rate of pay. PAY FREQUENCY Bi- Weekly Monthly Not eligible for overtime pay. 1 The University of Louisville workweek is Friday through Thursday. 2 Compensatory time cannot be used to offset any additional hours worked. 2

4 2016 FLSA Update: What is changing? Fair Labor Standards Act (FLSA) New Overtime Rule On May 18, 2016 the U.S. Department of Labor issued a final overtime rule that changes the exempt employee minimum salary to $47,476 more than double the old minimum of $23,660 effective December 1, This salary minimum will be updated every 3 years. There were no changes to the duties test. Changing from Exempt to Non- Exempt To ensure compliance, some positions will transition from exempt to non- exempt. All employees within an affected job title will move to non- exempt, even if their salary meets or is higher than the new salary threshold. Becoming Eligible for Overtime Employees will become eligible for overtime when they change to non- exempt. To assist with understanding what this means for you, please refer to the table below. WHAT WILL CHANGE? All hours worked must be reported, including overtime and time off. All hours worked beyond 40 hours a workweek 3 will be paid overtime pay of time- and- a half. WHAT WILL NOT CHANGE? Current employees switching to non- exempt will not see any changes in their current annual leave accrual rates, benefits or job title. These impacted employees are grand- fathered in and will keep their current leave accrual rates as long as they are in that job title. Will become eligible for two personal leave days beginning January 1, day of personal leave will be granted for the remainder of 2016 during this transition. The pay schedule will be bi- weekly. What You Can Expect Positions changing to non- exempt will make the transition effective December 1, 2016 (this had been updated since original communcations). At that time, you can expect to see differences in: Time Reporting: All hours must be reported, including any overtime and time off. Pay Period Change Begin to receive pay bi- weekly. Overtime Pay Eligible to receive overtime pay (straight pay up to 40 hours and time- and- a- half for any hours worked over 40 during a university workweek of Friday to Thursday). Any overtime hours must be pre- approved by your supervisor. It is important to discuss with you your supervisor their expectations when it comes to managing your schedule and potential overtime. 3 The University of Louisville workweek is Friday through Thursday. 3

5 Leave Accruals Annual Leave: Impacted employees moving to non- exempt job titles during this transition are grand- fathered in and will keep their current leave accrual rates as long as they are in that job title. If the employee leaves that job title for any reason, the grand- fathered leave accrual rate will end. Personal Days: Impacted employees will receive one personal day to use for the remainder of 2016 and begin to receive two personal days each calendar year, beginning o January 1, Personal days are in addition to annual leave. It is important to note that personal days do not carry over like annual leave though and are available only on a calendar year basis. Dates of Importance DATE EVENT NOVEMBER 30, 2016 NOVEMBER 28 DECEMBER 2, 2016 DECEMBER 1, 2016 DECEMBER 16, 2016 DECEMBER 22, 2016 Last monthly payday for the month of November Window for impacted employees to make adjustments to deductions Effective date of status changes. Impacted employees need to begin reporting all hours worked, including overtime and time off First bi- weekly paycheck for 6 out of 10 days (Dec 1-8). Includes ½ of monthly benefits deductions. Second bi- weekly paycheck (Dec 9-22), received early due to winter break. Includes ½ of monthly benefits deductions. JANUARY 13, 2017 Next bi- weekly pay period (for Dec 23- Jan 5) Things to Consider During the transition period, there are some things you will want to consider. Paycheck Deductions Many paycheck deductions selected by employees are set up to have a fixed amount deducted per pay period. Because an impacted employee will now be paid bi- weekly, thus being paid more frequently in one month, they will want to make any necessary changes to their deductions to avoid having more deducted from their paycheck then they wish. These deductions may include, but are not limited to, Fidelity or TIAA Cref contributions, additional taxes, parking, etc. Employees must complete any deduction changes from November 28 December 2, 2016 to make sure they are updated for their first bi- weekly paycheck on December 16, Additional information on how to make these changes will be provided to the employees with their letter. Different Paycheck Amount Employees becoming eligible for overtime will not have any change in overall pay. However, since impacted employees will be moving to a bi- weekly pay period, they will need to take into consideration their checks amounts will be different since they will be more frequent. To get an idea of their new gross paycheck amount, employees can visit our online paycheck calculator on the HR website (louisville.edu/hr/flsa). 4

6 Benefit Premiums Impacted employees will not have to pay any premiums for their health insurance in the month of November (the final monthly paycheck). The first bi- weekly paycheck they will receive is December 16. The monthly benefit premiums for December (i.e. health, dental, vision, etc.) will be split between the two checks in December (December 16 and December 22). The next bi- weekly payday is January 13. Supervisors should encourage affected employees to consider the impact of this (and all deductions) on their paycheck ahead of time. Review your Personal Finances In preparing to transition from monthly to bi- weekly, you should also review your non- UofL related automatic payments or transfers (i.e. mortgage payments, bank transfers etc) to make sure the timing is still appropriate and manageable. Timesheet Training As non- exempt, you must report all hours worked. You will want to discuss with your supervisor the departmental process for completing and submitting timesheets. The University of Louisville workweek is Friday through Thursday. Remember, non- exempt positions will have a standard hour of a 37.5 or 40- hour workweek. A workweek of Friday through Thursday should be used to determine if you will go over the standard hours in a workweek and become eligible for overtime pay. Your timesheet must be signed by your supervisor. Mobile Device and Computer Usage After Working Hours Using a mobile device or computer to access work s or phone calls after work hours is considered time worked (and potential overtime) and must be reported as such. To avoid unexpected overtime, set expectations with non- exempt employees about the use of these devices. Employees should not work on any device after their normal working hours, unless approved by the supervisor and the time is tracked and compensated. Using devices after normal working hours for non - exempt employees Answer phon calls, read or listen to voic Read/respond to , or any additional work o computer NO, unless approved by the supervisor and paid for time worked. NO, unless approved by the supervisor and paid for time worked. 5

7 Frequently Asked Questions Visit louisville.edu/hr/flsa for frequently asked questions. Additional Information Q&A Sessions for Impacted Employees are scheduled the first two weeks of October. Dates and times are posted on the HR website (louisville.edu/hr). 6